where:
NIT = Not index tracking
Using these formulas it will become clear which investment philosophy is imbedded into an ETF, moreover it culls out the category of index tracking ETFs that are not independently calculated and withhold full disclosure of their methodology.
[1] Rick Ferri, ETF Does Not Mean Index Fund, http://www.rickferri.com/blog/investments/etf-does-not-mean-index-fund/
[2] Cynthia Murphy http://www.etf.com/sections/features/21157-active-etfs-stand-out-in-2014-launches.html
[3] Joe Light, The Myth of a Stock-Picker’s Market, http://online.wsj.com/news/articles/SB10001424052702304856504579338800864733042
[4] Morgan Lewis, Investment Management Lawflash, http://www.morganlewis.com/pubs/IM_LF_SECIssuesNewReliefSelfIndexingETFs_17july13.pdf
This article was written by Michael Mell, Director for Custom Indices, S&P Dow Jones Indices.
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